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Lafayette Municipal Fiber Provider Filing Complaint Against Cable Co-Op Over Access

Phillip Dampier June 14, 2010 Community Networks, Cox, Editorial & Site News, LUS Fiber, Public Policy & Gov't 5 Comments

LUS Fiber is a municipally-owned provider competing in Lafayette, Louisiana

Lafayette Utility Systems’ LUS Fiber has filed a formal complaint with the Federal Communications Commission accusing the cable industry co-op of blocking the company from getting the favorable discounts and access to cable networks its competitor Cox Cable receives.

LUS Fiber Director Terry Huval said the blockade against LUS Fiber could ultimately cost the city millions and deny subscribers access to popular cable networks.  Huval accused its rival, Cox Cable, of being behind the repeated denials of membership for the Louisiana municipal cable system.

The municipal provider issued a news release stating that its complaint to the FCC originally was joined by municipal providers in Wilson, N.C., and Chattanooga, Tenn., but the National Cable Television Cooperative has since admitted those systems, while keeping LUS Fiber out.

“The NCTC opened membership to two other municipally-owned telecommunications companies that are very similar to our own Lafayette operation and in the same week refused to admit us on the same terms and conditions,” Huval said. “The only difference among the three systems is that our major cable competitor is NCTC’s largest member as well as a member of NCTC’s board of directors.”

LUS Fiber's primary competitor is Cox Cable

The NCTC is critically important to many medium and small sized cable companies who together collectively bargain access and the best possible volume discounts for hundreds of cable networks and broadcasters.  Those discounts are substantial, considering only Comcast gets larger discounts than the NCTC’s group membership.  NCTC membership also frees members from the tedious one on one negotiations cable systems would otherwise be required to conduct to obtain and maintain agreements with cable programmers.

Keeping LUS Fiber out means the municipal provider could be left charging higher prices than Cox charges for cable-TV in Lafayette.

Federal law appears to be on the side of LUS Fiber as part of the 1992 Cable Act that consumer groups fought for:

It shall be unlawful for a cable operator, a satellite cable programming vendor in which a cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programming distributor from providing satellite cable programming or satellite broadcast programming to subscribers or consumers.

The NCTC operates a spartan website at nctconline.org

As someone who personally was involved in the passage of that legislation, the ironic part is we were fighting -for- the NCTC back then.  Of course, those days the cooperative was made up of wireless cable providers, utility co-ops, municipal co-ops, and other independent cable systems that were constantly facing outright refusals for access to cable programming or discriminatory pricing.  Satellite dish-owners were also regularly targeted.  NCTC was a friendly group in the early 1990s but has since become dominated with larger corporate cable operators, especially Cox Cable and Charter Communications.

LUS builds a compelling case:

NCTC and its dominant members have not only grown significantly in size and power, but they have become increasingly anti-competitive themselves. They are now undermining Congress’s pro-competitive intent by using denial of membership in NCTC as an anticompetitive device to insulate NCTC’s existing members from competition by new entrants.

Specifically, in 2007 and 2008, NCTC imposed a “moratorium” on new members, claiming that it needed time to review its membership policies. In late 2008, NCTC supposedly lifted the moratorium, posting new application procedures on its website. These procedures, NCTC stated, would ordinarily result in admissions within 60-120 days. LUS promptly applied for membership, furnishing all of the information that NCTC required. In reality, NCTC only lifted the moratorium for private-sector cable operators, including Cox and Charter. For LUS and other municipal cable operators, NCTC’s claim to be open to new memberships turned out to be little more than a deceptive sham.

In short, as of April 2010, despite publishing procedures suggesting that new members would be admitted within 120 days, NCTC had not admitted a single new public communications provider during the year and a half since it supposedly lifted its moratorium.

Without access to programming at competitive prices, no one would consider switching to a municipal provider that charged higher prices than the incumbent.  The NCTC’s increasingly secretive and erratic admission of new municipal members provides ample ammunition for those on the outside looking in to accuse the group of unfair practices.

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ThatGuy
ThatGuy
9 years ago

This site is reporting on things that it only knows or shares half the story. I have been following the City of Lafayette’s foray into this folly since 2004. This is all brain-dead political grand-standing from people who don’t know what they are doing and don’t care (the City I mean). By state law, the City had to conduct a “Feasibility Study” and present it to the public. I was there when they did, on both nights. It was a dog and pony show to present a 30 page marketing brief. One financial scenario was presented: outstanding success within 3… Read more »

DM
DM
9 years ago
Reply to  ThatGuy

ThatGuy, I am hoping that both you and Phillip can perhaps update everyone on this situation since the original post is from June. You seem to favor the NCTC, but I think that some of your comments lack context. For example, you state that the whole story is not being told on this site. Could you provide some citations for the “other” viewpoint? Since this has been an ongoing situation that has lasted for many years, can we get some sense of where everyone stands on the issues currently? I think that would help flesh out the counter argument a… Read more »

ThatGuy
ThatGuy
9 years ago
Reply to  DM

Well, since you asked…. “You seem to favor the NCTC, but I think that some of your comments lack context…” It’s not that I favor the NCTC position, its that I am pointing out the tremendous folly in LUS’ position. Programming content is one of the biggest if not the biggest recurring expense in providing cable TV service, and the provider’s cost is solely driven by volume discount. They started all this without any indication whatsoever that they could or would be accepted into the NCTC or any other organization. That was a tremendous assumption that they have had 6… Read more »

DM
DM
9 years ago
Reply to  ThatGuy

ThatGuy, You seem to make some contradicting statements in your response and you did not provide any citations to prove or back up what you wrote. I will ask you again to please provide citations so that everyone reading this can better understand your position. “It’s not that I favor the NCTC position, its that I am pointing out the tremendous folly in LUS’ position.” I disagree. “In either case, the management of LUS is to blame, not the NCTC.” That is a quote from your first comment. Looks like you favor the NCTC position to me. “That was a… Read more »

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